The Oklahoma State Department of Health can now access approximately $202 million of the state’s $223.5 million Rural Health Transformation Program award for 2026. The agency provided updates on its plans during a webinar Thursday.
The Rural Health Transformation Program is a five-year, $50 billion federal investment that was signed into law last year alongside an estimated $911 billion in reductions to federal Medicaid spending over a decade. But the goal is not to make up for the cuts. Instead, officials want to transform how care is delivered in rural communities.
Oklahoma’s application received one of the highest awards nationally. The state got $23 million more than expected. The Centers for Medicare and Medicaid Services, which is administering the program, advised states to use a $200 million annual estimate when drafting their applications.
CMS required the State Department of Health to rework its budget to accommodate the additional funding, making it unavailable until it approved Oklahoma’s revisions.
A department spokesperson said Thursday the state agency received an updated notice of award, unlocking nearly $202 million. It will continue to coordinate with CMS on the review and release of the remaining $21 million.
But that doesn’t mean the funding is deposited into an account for the state, said Oklahoma Commissioner of Health Keith Reed. The opportunity is a cooperative agreement, meaning the state and CMS have roles in it.
“Like many of those grants, they typically operate through reimbursement mechanisms. We are working with CMS on ways in which we can draw down some of this money in advance,” Reed said. “It's a very large amount, but there's a lot of rules around how you do that and how you have to obligate that money and spend that money in certain timeframes.”
The state published a Rural Health Transformation Program Initiatives Summary Packet, with breakdowns of project funding and timelines. Examples include behavioral health integration in primary care, community health worker expansion in hospitals, rural residency programs, electronic health record expansion, school-based services support, a chronic disease management program and a telestroke program.
“We want to go to people where they live, work and play. We want to fill some funding gaps. We want to help some of our health infrastructure catch up after getting behind for years on things like technology and other advanced opportunities to provide state-of-the-art health care in their areas,” Reed said.
What’s considered rural in Oklahoma’s health transformation goal?
In the state’s application, the definition was “areas and populations located outside U.S. Census Bureau–defined urbanized areas and outside metropolitan statistical areas, consistent with definitions used by the Health Resources and Services Administration.”
That amounted to 59 of the state’s 77 counties. But Reed said the department worked with CMS to adjust the definition.
Now, he said, the definition will be the same as what the Oklahoma legislature uses, including all towns and communities with a population under approximately 50,000 that are not located within Oklahoma and Tulsa counties. That means communities across 75 counties are eligible, Reed said.
“There's going to be many opportunities for those around the state that are going to be able to apply for this. And those that are even located outside of some of these rural areas may also apply,” Reed said. “But we are going to require that they be very explicit and demonstrate how rural communities are going to be engaged as partners and how rural health transformation money will be serving specifically rural beneficiaries.”
Reed said the agency’s first priority has been getting agreements and funding opened up to partner agencies, including the Oklahoma Health Care Authority, State Department of Education and Healthcare Workforce Training Commission. Each will serve as a lead on certain projects.
The State Department of Health also hopes to begin opening microgrants for local communities. Reed said this will be an opportunity for communities to come together and apply for funding to support wellness needs.
The agency is working to follow state procurement rules and be good stewards of funding that could amount to about $1 billion over five years, Reed said. It also has an officer assigned to it from CMS, and Oklahoma will produce quarterly and annual reports.
But Reed added that Oklahoma wants to avoid being “overly bureaucratic.”
“We want to move as quickly as possible – just want to make sure we do it accurately and accountably,” Reed said.
During the webinar, Reed also introduced Lisa Rother and Jackie Kanak as Oklahoma’s co-directors for the Rural Health Transformation Program. Rother is working primarily with health systems and Kanak is over operations and population health.
Kanak said the agency plans to hold additional listening sessions across the state over the next year and encouraged Oklahomans to check the state’s website for additional updates.
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